Having A Profitable Business Is Hard AF
Whether you are selling something online that can be sourced from China or if you have a restaurant being profitable and being able to make a decent living at it is Hard As FUCK! A lot of people don't realize how hard it is because they have never had a business. Others that have a side business often times aren't good enough at math or are always fooling themselves into thinking what they are doing is profitable. Oftentimes it isn't.
Globalization
Even within the United States people's threshold is different for what is worth their time. If someone in Sketerville, Mississippi who lives in a trailer was blogging on Steemit and could earn $5 / day they might think that is worth their time. Is someone in New York City or San Francisco going to think the same thing? I'm keeping my eye on certain bloggers on here to see where their tap out point is. If the payouts are so low on something then if they buy any amount of equipment or travel anywhere as part of their blog they are in the red.
It isn't just in the United States though in the digital age. I see on Fiverr all the time there are people around the world willing to do logo designs for $5 and Wordpress websites for $10. They might not be the very best but usually what I do with logo designs is I pay 5 designers $5 and then usually one makes a really good logo. That is a lot better than getting something done locally for $300 or $400.
On eBay I see stuff being sold and shipped from China and it is hard to even know where the profit is by the time they ship. They will be selling iPod wires for a dollar. Even if it didn't cost them anything I can't imagine their profit being over $0.25 a unit. What a headache to ship it. But evidently it is worth it to people over there. It can be cool for the consumer but it is getting harder and harder to make a buck out there.
Race To The Bottom
I have been selling products online since 2008. In situations where I'm selling something that is an item others can get their hands on people are always in a race to the bottom. It is a total slut fest. They price stuff so cheap it isn't profitable. It is the most unimaginative strategy that often puts them out of business and everyone around them. I usually have my stuff priced 5% to 10% above the competition and mainly try to overpower the other sellers with better pictures and 100% positive feedback and a Power Seller rating. But once it gets past that 10% price differential sales will slow way down in my experience online. People are still looking for a decent deal and are smart enough to take 5 extra minutes to search it out.
This same principle applies in businesses that aren't online. People are always trying to do it cheaper. I would paint houses with a friend and some of the competing bids that would come in were ridiculous. We would bid a house at $1600 and some crack baby would bid the house at $400. The fact of the matter is their time wasn't worth as much. They might have only had $400 of expenses each month and so the way they looked at it is they would have everything covered for the month if they did the one job. Sometimes the quality could end up lower and sometimes it might be really good. I got some logos done from a guy in Sri Lanka for $5 that were amazing work. I was so blown away. Cat was out of the bag though and me and everyone else told people about how good he was and I just tried to get another logo done by him but he was so bogged down with work he wasn't able to even do it for $35. I was really upset because he was so great.
Lawsuits
Bigger companies will often strategically file lawsuits against smaller competitors just to crush them. Oftentimes these lawsuits have no merit and won't ever go to trial. In the United States it could take years for a civil trial to be heard if it did go the distance. They figure your common person can only afford $10,000 - $15,000 in legal fees before the settle by signing whatever bull shit agreement the bigger companies wants. This will often be something saying you won't sell whatever product you were selling. This is a very sad fact and it happens everyday.
Mental Pressure
It is hard to keep pushing day in and day out with anything. Usually when someone has a job they reluctantly go to work and even if the first two hours of the day is just trying to wake up they figure they are still getting paid. When you have your own business it doesn't pay to dick around. You have to start cranking out real productive work. Even if it is good it might not get you paid. It is a scary thing. That is why jobs aren't that bad of a deal. I know a lot of entrepreneurs will tell you that having a job isn't a good deal. In reality it takes so much of the risk out of what you are doing that it is a lot easier than working for yourself or having your own business. Often times you don't have the capital investment that you would with owning a business. Especially if it is something where you sell a tangible product and have to carry inventory. It makes it really tough.
Your job might be tough but business is tougher. People like to play the blame game but you just need to realize that life is Hard As Fuck!
You Will Always Be Under-capitalized
You will always feel like you don't have enough money to do the things you want to do with your business no matter how big you are. If you are a Steemit blogger maybe you want to buy some new camera equipment to do more video related things but feel like you can't justify it. If you are a re-seller you need more money to buy inventory.
Everyone always wants more so whatever level you get to you will always want to expand so you can potentially have that bad ass boat or sports car. You probably aren't in business for yourself if you aren't a fairly driven person to begin with.
I'm sure SpaceX would like to have a Trillion dollars to start colonizing Mars but right now they are under-capitalized for that.
You Can Do The Work Of Two Employees
This is oftentimes the case because the employees don't have the vested interested into your business unless they are getting stock options or some sort of partial ownership. They don't feel the financial pressure that you do and it probably doesn't mean as much to them especially this day in age. The days of people working at one company for 30 or 40 years are sort of gone in most aspects.
Bigger Companies Are An Entire Different Animal
The bigger companies have more headaches in a lot of ways because then you have to have managers managing managers and all kinds of other BS. Let's even just say in a resell environment online. Suddenly your warehouse gets so big you have to buy forklifts and hire forklift drivers. You have bigger liabilities and bigger overhead. It changes the game completely. Then instead of you or a business partner packing up product you have someone on bath salts hired through a temp agency half assing their job. It is tough and before you know it you can be out of business. Look at Circuit City. They were around for 60 years and then POOF they were gone. It is tough even when you get big.
Summary
@dantheman said this in one of his posts which is so true but this pretty much sums it up.
"The market will naturally push all profit margins toward $0."
It is the cold hard fact of business and you shouldn't forget it. If times are good and the profits are fat realize it might not last long and you have to be very smart about how you approach the situation. Also don't get too comfortable. There were a lot of people who made a ton of money reselling music online and in retail shops. A lot of that has gone away and they wish for those days to return.
Keep pressing on! It isn't easy! It is Hard As FUCK!
Thank you for reading my post and please consider following me @brianphobos
I run a part time computer repair business, I say I work about 15 to 20 hours a week. In order for me to get clients, market, fix issues and research best deals. I have to work more then my full time job.
I feel ya. It is brutal to make a buck and sometimes at a full time job especially if it has funding from taxes in some way shape or form they don't have to adhear to the competition of business. It is just getting pulled from people's taxes.
I'm from italy, I can tell you that here is probably even worse.
Bureaucracy and taxes are built to make it quite a big challenge.
It does seem like a lot of the places in Europe would be worse to make money. We get taxed pretty hard but you guys get taxed worse.
Had 2 successful businesses .. hard work, can't even start to explain what it's really like, lol
Good post !
Yeah it is brutal out there. You just have to work and work until you puke and you still might fail.
ya, I was so tired one time, I mixed bleach with ammonia in a mop bucket, then mopped the floor. Very lucky it was hot and had a fan on and the door open. All just part of it, until you can afford a cleaning crew.
GET SOME REST !, lol
Yeah it is so rough. A lot of times I'm surprised that as many businesses make it really. Oftentimes I wonder if the only way they make it is by having huge leverage applied over a long time and it is just a matter of time before the gig is up. Or these businesses that have no profitability and most likely never will. Like Twitter. Just floats for a decade or more off investor money. Crazy.
well ... i noticed within 6 mo. that 1/3 paid in cash and checks, so we did not report that income, showed profit in both our businesses in the 1st yra and after reporting 2/3 income. like most companies that make it, just got to figure out a way ..I did dishes and cleanup 1st year, saved us enough to make it. all businesses have a trick, just needs to be found. my thing was, If you let a penny fall through the cracks, soon a nickle then quarters, then ... when dollars are hemorrhaging ... Doors close ...
Now I understand the quizzing on the lingo yesterday. Great article, reminded me to get my butt back to working! :D
Hahah, Yeah that is why I was asking you! LOL
You speak the truth!
I run a business that is currently selling mostly on Amazon and it can e a brutal slog. At the end of the day its worth it though, more hours and less pay but no J-O-B and no Boss.
Sounds like you run your business on Ebay but if you ever want to talk shop let me know.
Followed and all that jazz.
I know you're busy .. but try to read or listen to the audiobook, "Acres of Diamonds" by Russell Conwell ... may not seem relevant until you're finished with it !!
"We need all the (Good) help we can get"
Good Luck & let me know what you think.
Just a thought to share and help !
"Read More, Reason More" ... JTS
Wow, eye opener. Thanks.